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DRAMeXchange has recently released its rankings for the top NAND suppliers of the world. I am producing bits of that report here, for the benefit of those interested in NAND and the memory market.

Be aware, that this segment has been hit particularly bad. We have heard of Qimonda’s problems, as well as Spansion’s. They are trying to battle it out, gamefully, and best wishes to them.

The global semiconductor industry needs the flash memory segment to recover, and fast, to bring the health back in the industry, as well as the missing buzz!

Getting back to DRAMeXchange’s report, NAND Flash brand companies released their total revenue of 2008. Samsung’s annual revenue was $4.614 billion and it gained 40.4 percent market share, to maintain the number 1. position.

According to DRAMeXchange, the annual revenue of Toshiba was $3.25 billion, and its market share was 28.1 percent at the number 2 position. Its market share increased 3.1 percent compared to 2007.

Hynix’s annual revenue was $1.727 billion, with 15.1 percent market share. Though it stayed at the number 3 position, its market share declined 4.1 percent, compared to 2007.

Micron’s annual revenue was $897 million. It had a 7.9 percent market share, which enjoyed a 1.8 percent increase when compared to 2007. Micron was number 4. Intel was at number 5. Its annual revenue was $660 million with 5.8 percent market share, which increased 2.1 percent, compared to 2007.

Numonyx’s (STMicro) 2008 annual revenue was $295 million. It was at number 6 position with the market share of 2.6 percent, which remained the same as 2007.

According to DRAMeXchange, the 4Q08 total revenue of worldwide NAND Flash brand companies was $2.227 billion, which dropped 19.3 percent from $2.761 billion in 3Q08. Under the continuing impact of global recession and the influence of declining worldwide consumer confidence, the 4Q08 revenue of NAND Flash brand companies showed signs of decreasing.

Last week, the global semiconductor industry has been hearing and reading about two big speculative stories:

a) A possible acquisition of SanDisk by Samsung, and b) A possible chance of AMD taking the fab-lite route.

First on Samsung’s buyout (possible) of SanDisk! There have been rumors of a possibility of Samsung acquiring SanDisk. While it is still a possibility, it also leads to several interesting questions!

Should this deal happen, what will be the possible implications for the memory market? Will this also lead to a possible easing off on the pricing pressures on the memory supply chain? And well, what happens to the Toshiba-SanDisk alliance?

A couple of weeks back, iSuppli, had highlighted how Micron had managed to buck the weak NAND market conditions, and was closing the gap with Hynix in Q2, and that NAND recovery was likely only by H2-2009.

I managed to catch up again Nam Hyung Kim, Director & Chief Analyst, iSuppli Corp., and quizzed him on the possible acquisition of SanDisk by Samsung.

A caution: Remember, all of this is merely based on speculation!

On the possibility of Samsung’s takeover of SanDisk, he says: “Samsung at least said that they consider it. Thus, it is a possible deal. But who knows!”

Kim is more forthright on the implications for the memory market, should this deal happen, and I tend to agree with him.

Consolidation inevitable; no impact on pricesThe chief analyst quips: “The NAND flash market is still premature and there are too many players in flash cards, USB Flash drives, SSD, etc. The industry consolidation should be inevitable in future.”

So, will this possible buyout at least ease some pricing pressures on memory supply chain? “I don’t expect this deal to impact the prices. Prices will depend on suppliers’ capacity plans. In the memory industry, the consolidation has never impacted the prices in a long run. (maybe, just a short-term impact). As you know, Micron acquired Lexar a few years ago, but no impact,” he adds.

Is there any possibility of SanDisk delaying its production ramps and investments at two of its fabs? And, what will happen should it do so?

Nam says: “SanDisk has already said that they would delay its investment and capacity plan given difficult market condition. This is a positive sign to the market as we expect slower supply growth than expected in future. However, in a long run, consolidation won’t impact the market up and down.”

Negative impact likely for Toshiba?Lastly, what happens to the SanDisk-Toshiba alliance, should the Samsung buyout of SanDisk does happen?

Nam adds: “It is negative to Toshiba. The company [Toshiba] not only loses its technology partner, but also loses its investment partner. It should be burden for Toshiba to keep investing themselves to grow its business.”

Well, in SEMI’s Fab Forecast Report, there is mention of how Toshiba and SanDisk are among the big spenders in fabs, in Japan. Considering that Japanese semiconductor manufacturers are more cautious, it would be interesting to see how this deal, should it happen, affects the Toshiba-SanDisk alliance.

Now, AMD goes fab-lite?While on fabs, this brings me to the other big story of last week — of AMD going the fab-lite route, possibly!

Magma’s Rajeev Madhavan had commented some time back that fab-lite is actually good for EDA. It means more design productivity. Leading firms such as TI, NVIDIA, Broadcom, etc., are Magma’s customers.

Late last year, Anil Gupta, MD, India Operations, ARM, had also commented on some other firms going fab-lite! Gupta pointed out Infineon, NXP, etc., had announced Fab-Lite strategies. Even Texas Instruments was moving to a Fab-Lite strategy. “IDMs are going to be the fabless units of today and tomorrow,” he added.

So much for those who’ve taken the fab-lite route, and industry endorsements.

On the fab-lite subject, iSuppli’s Kim will not speculate whether AMD would actually break up into into two entities: design and manufacturing, and also prefers to wait and watch.

How does fab-lite actually benefit? He comments: “Fab-lite has not been working well in the memory industry, which requires very tight control. It works, IF two companies (an IDM and a foundry) work very closely. For example, the industry leader, Samsung, produces all of the memory alone without any foundry relationship.”

Recently, SEMI (Semiconductor Equipment and Materials International) released its World Fab Forecast report. This report mentions that projected decline in world semiconductor fab equipment spending of 20 percent is likely for 2008. However, a rebound of over 20 percent in spending is expected in 2009, driven by over 70 fab projects.

The August 2008 edition of this report lists 53 fab equipping projects and up to 21 construction projects for fabs in 2009. It is sincerely hoped that at least one of the fabs likely from the Southeast Asian region is from India!

With the help of Scott Smith Senior Manager, Public Relations, SEMI, I was able to get in touch with Christian Gregor Dieseldorff, Senior Manager of Fab Information and Analysis at SEMI, in an attempt to find out more about the decline in global fab spends, these new fabs, and how these fabs can lead a turnaround in the global semiconductor industry. Thanks Scott!

So what are the chief reasons for the decline in fab spends during 2008? According to Dieseldorff, given the weaker economic conditions globally, coupled with higher energy and commodity prices and the financial crisis, the overall outlook for semiconductor growth in 2008 is for low-single digit growth in both revenues and units. As such, device makers have responded by cutting back their capital spending and pushing out fab projects or putting them on hold.

I was keen to find out the geographic breakup of these 70 new fabs that are likely yo come up in 2009.

Dieseldorff advised that these are not 70 new fabs coming up in 2009. Rather, the numbers reflect 300mm fabs only, and is a mix of on-going and new projects for fabs equipping and fab construction projects in 2009.

What are the salient features of some of these new fabs likely to come up next year (for instance, new tech nodes)? Dieseldorff highlighted that about 90 percent of the investments are for 300mm capacity, and the amount of spending for advanced nodes, such as 65nm, is increasing.

“Also, device makers are building larger fabs, which are termed “mega fabs,” so, to potentially realize a greater return based on scales of economy,” he added.

How will these new fabs contribute to a better performance from the global semicon industry? This will be quite interesting to witness.

Dieseldorff said that over the past several years, demand for semiconductor devices has been quite strong, and so, the industry has had to bring on capacity to support this need, both in terms of needed capacity and technology. Even with the slower market growth in 2008, recent industry data shows healthy levels of fab capacity utilization, especially for the advanced technology generations and for 300mm manufacturing.

He added: “The expectation is that demand for semiconductors will strengthen once global economic conditions improve. So, the capacity addition that is coming online this year and the fab projects that are equipping and beginning construction in 2009 are necessary to meet the future demand.”

So how will all of this affect the overall memory market (e.g., 42pc increase in share for memory)? Dieseldorff shared his thought, a fact, known well to those in the semiconductor industry, that the memory market has been battered by declining average selling prices and a condition termed by some as “profitless prosperity.”

“Looking at demand forecasts specific to memory, tremendous growth is anticipated,” he forecasted.

However, the manufacturers in this device segment are battling it out for market share, and the general expectation is that consolidation will continue.

Also, joint-ventures and partnerships are becoming increasingly critical in the memory sector as manufacturers seek to leverage their existing resources to meet future technology and capacity requirements.

It would be interesting to find out why Taiwan and Korea are forecasted as likely to exceed Japan in fab spend?

According to Dieseldorff, in Korea, Samsung has been and is the key spender, and as a company, it will continue to invest so to have a dominant share in the memory sector.

He said: “In 2009, our expectation is for the DRAM manufacturers in Taiwan to boost spending after cutting back this year. We expect seven new 300 mm fab lines in Taiwan to come into production over the next two years.”

However, spending in Japan has been more measured and is likely to remain so. Toshiba, and its joint-venture partner, Sandisk are the big spenders in Japan, when it comes to new fab capacity. Other Japanese semiconductor manufacturers are more cautious and are focused more on technology spending.

IC Insights recently published the May update to The McClean Report, featuring the Top 20 global semiconductor companies. Not surprisingly, there have been some significant movers and shakers. The most telling — quite a few of the major DRAM and Flash suppliers have dropped out of the Top 20 list!

First the movers! Fabless supplier Qualcomm jumped up four spots, ranking as the 10th largest semiconductor supplier in Q1-08. Next, Broadcom, the third largest fabless supplier, also moved up four positions, up to the 20th position. Panasonic (earlier, Matsushita), moved up to the 19th position, while NEC of Japan moved up to the 13th position.

TSMC, the leading foundry, moved up one position, registering the highest — 44 percent — year-over-year Q1-08 growth rate, besides being ranked 5th. Nvidia, the second largest fabless supplier, was another company registering a high YoY growth rate of 37 percent, and moved into the 18th position. Some others like Infineon, Sony and Renesas also climbed a place higher each, respectively. The top four retained their positions — Intel, Samsung, TI and Toshiba.

And now, the shakers! The volatile DRAM and Flash markets have ensured the exit of several well known names such as Qimonda, Elpida, Spansion, Powerchip, Nanya, etc., from the list of the top 20 global semiconductor companies, at least for now.

Among the others in the list, the biggest drops were registered by NXP, which dropped to 14th from 11th last year, and AMD, which dropped two places, from 10th to 12th. Two memory suppliers — Hynix and Micron — also slipped two places, to 9th and 15th places, respectively. STMicroelectronics also slipped from 5th to 6th. IBM too slipped out of the top 20 list.

The top 20 global semiconductor firms comprises of eight US companies (including three fabless suppliers), six Japanese, three European, two South Korean, and one Taiwanese foundry (TSMC). Also, looking at the realities of the foundry market, TSMC’s lead is now unassailable. If TSMC was an IDM, it would be No. 2, challenging Intel and passing Samsung, said one analyst, recently, a thought shared by many.

IC Insights has reported that since the Euro and the Yen are strong against the dollar, this effect will impact global semiconductor market figures when reported in US dollars this year.

There are some other things to watch out for. Following a miserable 2007, the global DRAM module market is likely to rebound gradually in 2008 due to the projected recovery in the overall memory industry, according to an iSuppli report. That remains to be seen.

Some new DRAM camps — such as Elpida-Qimonda, and Micron-Nanya — have been formed. It will be interesting to see how these perform, as will be the performance of ST-backed Numonyx.

Further, the oversupply of NAND Flash worsened in Q1-08, impacted by the effect of the US sub-prime mortgage loan and a slow season, according to DRAMeXchange. The NAND Flash ASP fell about 35 percent compared to Q4-07. Although the overall bit shipment grew about 30 percent compared to Q4-07, the total Q1-08 sales of branded NAND Flash makers fell 15.8 percent QoQ to US$3.24bn. Will the NAND Flash market recover and by when?

NAND Flash market share by sales for Toshiba rose to 26.4 percent compared to 4Q07 and continued to be in the second place among the branded NAND Flash makers.

Due to Toshiba’s successful increase in 56nm node production, it was able to resist the effect of the NAND Flash price decline. However, 1Q08 sales were flat compared to 4Q07 at US$855m.

The 1Q08 market share by sales for Hynix fell to 17.5 percent, though it continued to stay at the number three spot among branded NAND Flash makers. As Hynix lowered its NAND Flash production, 1Q08 bit shipment increased only 9 percent QoQ. However, due to the fall of NAND Flash ASP at 39 percent QoQ, 1Q08 sales for Hynix fell to US$569m, or a decline of 29.1 percent QoQ.

With the ramp up of 50nm node, Micron and Intel continued to see steady growth in a bit shipment in 1Q08. However, impacted by the large decline in NAND Flash price, their 1Q08 sales fell compared to 4Q07. Micron and Intel 1Q08 sales were US$248m and US$181m, respectively, with a market share of 7.7 percent and 5.6 percent, each.

As STMicroelectronics primarily produces NAND Flash for cell phone applications, revenue for 1Q08 was not as severely impacted by the price decline. Revenue for STMicro in 1Q08 fell slightly to US$85m, or a slight decline of 6.6 percent compared to 4Q07. The 1Q08 market share by sales was 2.6 percent.

Since Renesas continued to reduce its AG-AND Flash production in 1Q08, Renesas/PSC camp sales fell roughly 60 percent compared to 4Q07 with a market share of 0.6 percent.

Vendor performances were mixed with two vendors in the top 10 that experienced double-digit growth and two vendors that showed declines in revenue.

“Semiconductor vendors need to watch the performance of their end customers even closer as a major part of the industry becomes increasingly tied to consumer spending patterns,” said Andrew Norwood, research vice president at Gartner. “Loss of market share in an end-user application, such as a mobile phone, by a customer (a mobile phone manufacturer) can have a dramatic effect on a vendor’s business.”

Intel grew revenue more than twice as fast as the semiconductor market average, and it is likely to edge up its market share to 12.2 percent in 2007 from 11.6 percent in 2006.

Intel’s growth came primarily from strong shipments of mobile PCs. Armed with a strong product lineup for enthusiast desktops and servers, Intel regained lost share in those markets from AMD.

While the global market for dynamic random-access memory (DRAM) is expected to decline in 2007 due to a severe drop in prices caused by oversupply, Samsung Electronics is likely to increase its revenue by slightly higher than the overall global semiconductor market growth rate (DRAM is one the firm’s main products).

According to the latest report from IC Insights, there have been major shakeups in the global top 10 rankings among suppliers of semiconductors.

Here’s what IC Insights has to say regarding some of the changes that took place in 3Q07:

* Toshiba rode the coat-tails of a 46 percent 3Q07/2Q07 NAND flash memory market surge to post an amazing 40 percent 3Q07/2Q07 semiconductor sales increase. This increase helped propel Toshiba to a third place ranking, its highest since being ranked as the second largest semiconductor supplier in 2000.

* AMD continues to display a nice recovery this year with its 3Q07 sales increasing 18 percent over 2Q07, which follows a 12 percent sequential increase in 2Q07/1Q07. As part of its continuing MPU marketshare battle with Intel, AMD is expected to announce a major manufacturing/foundry deal in the second half of 2007.

* The largest pure-play foundry in the world, TSMC, jumped one spot in 3Q07 as compared to the full-year 2006 ranking as the company recorded a strong 3Q07/2Q07 sales increase of 21 percent. It should be noted that after operating at only 83 percent capacity utilization in 1Q07, TSMC surpassed its “company-defined” 100 percent capacity utilization level in 3Q07!

* If pure-play foundry TSMC were excluded from the ranking, NXP would have been in the tenth position.

* In spite of 3Q07 DRAM pricing weakness, Hynix took advantage of its strong NAND flash marketshare to move from seventh to sixth place in the ranking.

* Freescale continues to feel the pain of its biggest customer, Motorola, as the company went from being ranked as the ninth largest semiconductor supplier in the world in 2006 to sixteenth in 3Q07. Unfortunately for Freescale, Motorola has gone from holding a 22 percent share of cellular phone unit shipments in 3Q06 (53.7 million) to securing only a 13 percent share in 3Q07 (37.2 million).

* TI, ST, and Renesas were the only top 10 companies to register less than double-digit 3Q07/2Q07 sequential sales growth rates. Each one of these companies is a top-10 supplier to the currently slow-growing analog IC market.

* The top 10 listing consists of three U.S., three Japanese, two Korean, one European, and one Taiwanese company.

Through the end of 2007, IC Insights expects to see pricing stability return to the DRAM memory market, surging IC demand for PCs and high-end cellular phones, and a continuation of the seasonal rebound in overall semiconductor demand that began in August.